Market Talk

Banks are leading the market down, after JPMorgan’s earnings report looked great on the bottom line, but not quite so hot above there. Also, today’s data offer more dismal markers on the recovery.

Before you get to the video, ponder this from Capital Economics’ Paul Ashworth: “Today’s data releases suggest that the industrial recovery is rapidly losing momentum, making deflation an even bigger threat.”

R’ut r’oh, Shaggy. Ah, well, here’s today’s Markets Hub:

US stocks finish mixed, with blue chips extending their winning streak, as the Fed downgrading its economic growth outlook weighs on Intel’s blowout earnings.

Dow rises for a seventh-straight day, narrowly edging up 4 to 10367, its longest wining streak since March. Nasdaq Comp gains 8 to 2250, but S&P 500 drops 0.2 to 1095.

Fed, which trims its forecast for first time in more than a year, now expects GDP growth of 3% to 3.5% and sees prospect of more monetary stimulus. Economic data also disappoint amid a bigger-than-expected decline in retail sales and smaller-than-predicted gain in business inventories.

But weak economic data have largely been overshadowed this week as earnings season has gotten off to a commanding kickoff.

Lots on deck for tomorrow. JPMorgan reports in the AM and Google’s posting earnings after the bell. PPI, industrial production as well as weekly jobless claims on the economic calendar. And China’s expected to report 2Q GDP.

Looks like yesterday’s late swoon is going to continue into today. US stocks futures weaker, as are European and Asian stocks.

How far the selling here goes could be determined by two economic reports this morning, on retail sales and industrial production. If they shows signs the recovery is flagging, things could get dicey.

Crude down nearly $2 in $72/barrel range. Euro continues its slide, under $1.24, and the pound is under $1.46. That, of course, is driving up the dollar. Through yesterday, the dollar’s up 14% on the euro.

S&P futures down 7.50, 10-year yield down to 3.50%.

The Greek end game is coming (again), industrial production in the US looked pretty good, but jobless claims rose again, and that’s a concern.

We still got Amazon.com, Ma.

So, let’s get this straight. The winter storms kept people from getting to their local unemployment offices, but didn’t stop them from going to the malls, but did keep them from getting to their factory jobs. Got that?

Reports out today on February’s industrial production and capacity utilization, as well as the New York Fed’s Empire State manufacturing survey, were held in check by the winter storms, so we’re told. Industrial production inched ahead 0.1%, and is up 1.7% from a year ago. And while capacity utilization crept up also, to 72.7% from a revised 72.5%, it still remains well below the long-term average of 80.6% — snow or no snow.

Meanwhile, the Empire State survey slipped a bit in March, but still showed growth, and Capital Economics thinks the report was better than the headline number suggests, given that new orders and shipments hit six-month highs, and employment hit its highest level since the recession started. And given the timing of the survey, weather likely didn’t play a part. “At current levels, the Empire State index is broadly consistent with the ISM index holding steady at around 54.8 in March,” the firm says.

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Abundant supply of US economic data for investors to sink their teeth into this week, along with an FOMC meeting to add a dash of intrigue.

This morning brings NY Fed’s March Empire State Survey at 8:30am; February industrial production & capacity utilization at 9:15am; and homebuilders March sentiment index set for 1:00pm.

US dollar is looking livelier after a sharp retreat Friday. Comments from Moody’s regarding the US, UK, France and Germany getting their finances in order have helped pressure the euro and boost the buck. US dollar index recently at 80.15.

Stocks mostly lower in Asia overnight, moderately lower now in Europe. S&P futures down 3.30; 10-yr a bit higher, yield at 3.69%.

Today we’re talking about rising numbers — industrial production, Deere’s earnings, housing starts — and the caveats you need to keep in mind along with those numbers.

My old Kentucy home looks better than expected.

Some positive news on the economic front this morning, with housing starts posting their strongest increase since July, import prices rising for sixth straight month and industrial production rising higher than economists expected.

Of course the data aren’t all rosy as there are several caveats to today’s reports. January housing starts rose 2.8% to 591,000 annual rate, the highest in six months and 24% from the all-time record low set in April 2009. However, economists were expecting a 5.9% increase. New building permits also dropped, a sign the housing sector is recovering at a slow pace.

And starts had rebounded to 590,000 in June, so they essentially haven’t gained or lost any ground throughout the last eight months. From Miller Tabak’s Dan Greenhaus:

We’ve gone nowhere. Starts, in comparison to other housing metrics, carry a significant amount of weight with respect to economic recovery. Upon starting a house, people must be hired to build it, to install the plumbing, to set up the electrics. Wood must be ordered, copper secured, etc. A housing start is quite important with respect to economic recovery and the lack of any sustainable and meaningful improvement on this measure is one reason we are less excited about the current recovery than some of our peers.

Paul Ashworth, senior economist at Capital Economics, also points out housing starts at a 591,000 annualized rate represents about a quarter of what they were back during the housing boom.

“This is disappointing given the much bigger rebound in home sales last year and the modest recovery in prices,” Ashworth says. “It appears builders fear that sales and prices will drop back once the Federal tax credit for homebuyers expires in April…In short, housing isn’t going to add much to the recovery.”

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So Intel and JPMorgan posted some sharp numbers that didn’t do anything for the markets, and the data disappointed as well. On the other hand, China’s mountain of money keeps growing.

On a related programming note, I’ll be on WSJ.com‘s “News Hub” today at 4 p.m. ET.

I wanted the double dip!

As I said yesterday on Foxbusiness.com Live, a so-called “double dip” recession is still a very real possibility for the economy. What I didn’t get to say is that if that does occur, say by the second or third quarter, it wouldn’t surprise me if the NBER, the outfit that dates recessions, were to declare this entire span, beginning in December 2007, one long recession.

And this morning we got a report that industrial production rose in December, with capacity utilization edging up to 72%. That’s good, but (and there’s always a but) IP rose mainly on the back of increases from utilities ramping up because of the cold winter.

And capacity utilization remains well below its long-term average of 80% (and that’s just the average, forget about an economy that’s roaring,) and is still closer to its record low of 68.3% hit in June. There’s still an awful lot of slack in the economy, is what that all means. Which is a goofy, econospeak way of saying the nation’s factories could be producing more, but aren’t. The reason, of course, is a lack of demand from consumers.

Here’s something from another part of the DJ empire:

WASHINGTON -(Dow Jones)- The World Bank’s chief economist warned Thursday the global economy may suffer a double-dip recession.

“The foundation for the recovery is very fragile,” Justin Lin told the Council on Foreign Relations. “We may have a double dip,” he said, citing excess global capacity that could linger until 2014.

Beyond the weak economic fundamentals underlying the emergence from recession, Lin said he is also concerned that the world economy is entering “uncharted waters.” In an environment of low interest rates and excess capacity, most of the liquidity could go into speculative investments, he said.

Other risks are that banks continue to hold bad debts on their balance sheets, as well as an potential rise in protectionism, said Lin. While rising debts from fiscal stimulus is also a concern, it will only become an issue if the spending doesn’t boost productivity, he said.